Geographically, organizations in the South posted an increase in NPSR per adjusted discharge year-over-year and fell just below budget. All other regions experienced declines year-over-year and underperformed against budget with the exception of the West. While most regions saw unfavorable growth in bad debt and charity care year-over-year, performance in the Midwest regions stand out as negative outliers, with a 17 percent increase in bad debt and charity care year-over-year, and numbers that are 15 percent higher than budgeted. Conversely, the South posted significant decreases in bad debt year-over-year. This may be due to changes in Medicaid coverage and/or access to affordable care.

NPSR per Adj. Discharge

NPSR per Adj. Patient Day

Bad Debt and Charity

NPSR per Adjusted Discharge

NPSR per Adjusted Patient Day

Bad Debt And Charity as a % of Gross

National Revenue Observations

In May, revenue per adjusted discharge declined slightly and posted below budget nationally as a result of the increased shift to outpatient care, which impacted smaller organizations especially heavily. Decreased reimbursement per case necessitates that hospitals develop the ability to better adjust operations in light of continuing revenue pressures.
As more payers move to per-case reimbursement, hospitals must focus attention on and closely monitor net patient service revenue (NPSR) per case rather than per adjusted patient day, the more traditional metric. However, NPSR per adjusted patient day does remain a valid metric and provides insight into how an organization may be managing patient throughput and LOS. Nationally, revenues per adjusted discharge have declined year-over-year, and hospitals are struggling to achieve NPSR budgets. This trend is reflected in this month’s performance.
Leaders should closely analyze changes in payer and service mix, which are key drivers of these metrics and for overall organizational operating margins. The ability to better forecast and budget for revenue swings is imperative.
All regions and hospital sizes continued to see an increase in year-over-year growth of both inpatient and outpatient volumes. While growth in outpatient volumes and revenues traditionally translates to a positive financial return for health systems, acute hospitals also typically face tremendous competition from other providers, including physicians and for-profits, and can thus be vulnerable to significant drops in outpatient revenue and profitability when new market service options open.

Budget Variance

Month Over Month

Year Over Year

Year Over Year Distributions

(Click to enlarge)

NPSR per Adj. Discharge

(2.0%)

(3.2%)

(0.8%)

NPSR per Adj. Patient Day

0.9%

0.4%

1.0%

IP/OP Adjustment Factor

3.6%

2.0%

1.7%

Bad Debt and Charity as a % of Gross

2.0%

5.6%

3.8%

Unless noted, figures are Actuals and Medians

By Region

By Bed Size

National Observations

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Revenue by Bed Size

Hospitals of all sizes demonstrated unfavorable to mediocre performance compared with budget expectations for NPSR per adjusted discharge with the exception of those with 100-199 beds. In addition, year-over-year actuals for this critical metric are largely negative, with the exception being a modest 2-4 percent increase among hospitals and health systems with greater than 300 beds. Decreases in NPSR are most severe among the smallest organizations, potentially suggesting decreases in case severity and eroding payer mix for independent or small community hospitals.